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Breakthrough in German coalition talks

Berlin, Jan 12 (Agencies)
Published on 12 Jan. 2018 11:56 PM IST
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Angela Merkel’s conservative bloc and its left-of-centre rivals the Social Democrats have achieved a breakthrough in exploratory talks on forming a new “grand coalition”, raising hopes of an end to the political deadlock that has gripped Germany since inconclusive elections in September.
The breakthrough came during talks on Friday morning between Ms Merkel, Horst Seehofer, leader of the Bavarian CSU, and Martin Schulz, the Social Democrat chief. The three will now recommend to their parties that they start official coalition talks, reported Financial Times.
The euro rallied after the terms of the coalition deal emerged, reaching its highest level against the dollar since January 2015, up by as much as 0.8 per cent on the session to $1.2125.
The negotiations, which began on Sunday, were marked by deep disagreements over fiscal policy, with the CDU/CSU strongly resisting SPD demands for a tax increase on higher earners, and over how to spend Germany’s €45bn surplus. Other contentious issues included immigration and health policy.
The SPD will first have to give the green light for formal coalition talks at a special party conference on January 21 in Bonn. Any coalition agreement will also have to be voted on by the SPD’s 400,000 members, many of whom are reluctant to see the party team up with Ms Merkel’s bloc.
Yet Friday’s breakthrough is still the first concrete sign that Germany’s long-running political crisis may finally be coming to an end. Europe’s most powerful economy has been without an effective government since Bundestag elections in September which saw Ms Merkel’s CDU/CSU bloc and the SPD fall to their worst result since 1949 and the far-right Alternative for Germany party pick up parliamentary seats for the first time. Ms Merkel previously tried to form an unprecedented coalition with the liberal Free Democrats and the environmental Greens, but those talks collapsed unexpectedly in November.
The political paralysis has harmed Germany’s international standing and held up business in Europe, where capitals are still waiting for a German response to Emmanuel Macron’s ambitious proposals for reforming the EU.
DPA reported that the CDU, CSU and SPD leaders had come up with a joint 28-page paper which would now be presented to the parties’ negotiating teams. If they back it, the SPD party executive will meet to decide on whether to proceed with formal talks. The Social Democrats have been agonising for weeks over whether to get into bed with Ms Merkel’s conservative bloc or go into opposition. 
Many in the party have blamed its dismal performance in the Bundestag elections on its alliance with the conservatives between 2013 and 2017: during that time it scored some significant wins, such as the introduction of a minimum wage and lower pensionable age. But many in the party felt that Ms Merkel’s party got all the credit.
While some Social Democrats are resigned to re-forming the grand coalition for the sake of political stability, others, such as the Jusos, the party’s youth wing, and some powerful regional associations, remain firmly opposed.

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